Delhi HC Directs Appeal Against Penalty for Alleged Fake ITC Claim

Case Details:

• Case Title: SS Enterprises v. Office of the Commissioner, Central Tax Delhi West & Anr.

• Court: High Court of Delhi

• Petition No.: W.P.(C) 5684/2025

• Date of Judgement: 01.05.2025

• Category of Dispute: Input Tax Credit – Fake Invoices & Procedural Fairness

• Relevant Sections: Section 75(5), Section 107 of CGST Act, 2017

• Penalty Imposed: ₹36,05,299/-

Facts of the Case

(Ref: Paras 4, 5, 6, 7)

1. The Petitioner challenged the Order-in-Original dated 31.01.2025, imposing a penalty of ₹36,05,299/-.

2. Allegations were that Petitioner received goods-less invoices from two firms linked to one Ms. Aarti Kapoor, forming part of a ₹172 crore fake ITC scam.

3. Petitioner claimed that hearing notices were not received in time and denied any connection with Ms. Kapoor.

4. Records showed the notice for personal hearing was received on 18.01.2025, giving the Petitioner time to attend the 21.01.2025 hearing.

Question(s) in Consideration

(Ref: Paras 5, 7, 8, 9)

1. Whether failure to attend earlier hearing dates due to delayed notice service deprived the Petitioner of a fair hearing.

2. Whether the Department was bound to provide three personal hearings under Section 75(5) of CGST Act.

3. Whether the High Court should intervene or direct the Petitioner to the appellate remedy under Section 107.

Observations of the Court

(Ref: Paras 7, 8, 9, 10)

1. Section 75(5) permits up to three adjournments but does not guarantee three hearings.

2. Since the Petitioner received notice before the final hearing and did not attend, the grievance on hearing opportunity was untenable.

3. The impugned order is appealable under Section 107, hence writ jurisdiction was not warranted.

Judgement of the Court

(Ref: Paras 11–15)

1. Petitioner directed to file an appeal before the Appellate Authority under Section 107 of CGST Act.

2. Department to supply all Relied Upon Documents (RUDs) within two weeks to Petitioner’s counsel.

3. Appeal to be filed within 30 days of receiving RUDs; such appeal will not be dismissed on limitation grounds and will be decided on merits.

4. Writ petition disposed of with these directions.

Between Fine Lines

• The High Court refused to quash the penalty at the writ stage.

• Receipt of notice before the last hearing date was sufficient for compliance with natural justice.

• Section 75(5) does not mandate three hearings, only limits adjournments to three.

• Remedy lies in filing an appeal with full documentation.

• Court ensured access to all relied-upon documents before appeal filing.

Summary of Referred Cases

No prior case laws were cited or discussed in the judgement.

Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”